China’s export increased less than expected

Chinese exports
Chinese exports

China’s export increased with a slower pace than the expectations made in August, while imports fell unexpectedly – difficulties of the global economic slowdown that China faces in the weak domestic demand. The exports grew by 2.7% y / y in August, below the projected 3%, confirming the warning of the president Hu Jing Tao for a “great challenge” for the world economy.

The import data deteriorated, showing a decline of 2.6% y / y in August, against the expectations for growth of 3.5%. This will reinforce the market expectations for further stimulation and monetary easing in support to the growth, before the change of government in China later this year.

The chief Chinese economist from Hong Kong, Djan Jivey, said that the decrease of their import is extremely unusual and it is alarming signal for the government. It became clear that the delay is growing and the government feels need to act. He expects further weakness in the coming months.

So weak data are bad sign for the country, where the export constitutes 25 per cent of gross domestic product and supports about 200 million jobs, so the analysts now expect the economy to grow by minimum rate from 1999.

Some economists are apprehensive of the prospects, which are so weak that China may not reach the official forecast for growth of 7.5% in 2012 without a new round of rapid political and financial stimulations, undertaken in the past year.

These concerns were reinforced by data on Sunday, showing that the growth of the industrial production was the weakest in August for more than three years.

The problem for Beijing is that, despite the deep pockets of the government, the surplus of the budget in the first half of the year and the monetary policy, even with a report of the inflation, is near to the two-year low and the policy can do little to stimulate a demand in the foreign countries.

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